BMW 2012 Annual Report Download - page 62

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18 COMBINED GROUP AND COMPANY
MANAGEMENT REPORT
18 A Review of the Financial Year
21 General Economic Environment
24 Review of Operations
44 BMW Stock and Capital Market
47 Disclosures relevant for takeovers
and explanatory comments
50 Financial Analysis
50 Internal Management System
52 Earnings Performance
54 Financial Position
57 Net Assets Position
59 Subsequent Events Report
59 Value Added Statement
61 Key Performance Figures
62 Comments on BMW AG
65 Internal Control System and
explanatory comments
66 Risk Management
74 Outlook
Comments on Financial Statements of BMW AG
The financial statements of BMW AG are drawn up in
accordance with the German Commercial Code (HGB)
and the German Stock Corporation Act (AktG).
BMW AG develops, manufactures and sells cars and
motorcycles manufactured by itself, foreign subsidiaries
and Magna Steyr. Sales activities are carried out through
the Company’s own branches, independent dealers,
subsidiaries and importers. The number of cars manu-
factured at German and foreign plants in 2012 rose by
7.1 % to 1,861,826 units. At 31 December 2012, BMW AG
had 74,571 employees, 2,941 more than one year
earlier.
Sales volume went up again in 2012, as a result of which
revenues grew by 6.9 % compared to the previous year.
The most significant increase was recorded in Asia.
Sales to Group sales companies accounted for € 43.9 bil-
lion
or approximately 74.7 % of total revenues of
€ 58.8 billion. The increase in cost of sales was slightly
less pronounced than the increase in revenues. As a
consequence, gross profit increased by € 866 million to
€ 12.6 billion.
Research and development expenses were 17.3 % higher
than in the previous year, driven primarily by activities
related to the electrification of the future product range.
The increase in net other operating income and expenses
in 2012 was attributable mainly to exceptional factors
in 2011 (income from retrospective changes to transfer
prices and from the reversal of warranty provisions) and
lower expenses for allocations to onerous commodity
and currency hedging contracts in 2012.
The financial result improved by € 566 million, mainly
as a result of the positive impact of fair value changes in
designated plan assets for pension and other long-term
personnel-related provisions and the offsetting nega-
tive effect of impairment losses recognised on
financial
assets.
The profit from ordinary activities increased from
€ 4,037 million to € 4,797 million.
The expense for income taxes relates primarily to current
tax for the financial year 2012, and is lower than in the
previous year mainly as a result of a reduced amount of
expense recorded in conjunction with provisions for tax
field audit risks.
After deducting the expense for taxes, the Company re-
ports a net profit of € 3,131 million (2011: € 1,970 million).
Capital expenditure on intangible assets and property,
plant and equipment amounted to € 2,776 million (2011:
€ 2,032 million), an increase of 36.6 % over the previous
year. The main focus was on product investments for
production start-ups and infrastructure improvements.
Depreciation and amortisation amounted to € 1,613 mil-
lion (2011: € 1,578 million).
Investments went up from € 2,823 million to € 3,094 mil-
lion, mainly as a result of transfers to capital reserves at
the level of BMW Bank GmbH, Munich, and the acqui-
sition of shares in BMW Finance S.N.C., Guyancourt,
which were subsequently contributed to BMW Bank.
An impairment loss of € 143 million was recognised in
2012 on the investment in SGL Carbon SE, Wiesbaden.
At € 3,749 million, inventories remained at a similar level
to the previous year despite the expansion of business
operations during the year.
Cash and cash equivalents rose by € 1,754 million to
€ 4,618 million, reflecting good earnings, the concen-
tration
of liquidity at the level of BMW AG and a
re duction in investments in marketable securities in
favour of liquid funds. Financial receivables from sub-
sidiaries decreased.
Equity rose by € 1,642 million to € 9,864 million and the
equity ratio improved from 29.9 % to 30.9 %.
In order to secure obligations resulting from pre-retire-
ment part-time work arrangements and a part of the
Company’s pension obligations, assets have been trans-
ferred to BMW Trust e.V., Munich, in conjunction with
Contractual Trust Arrangements (CTA), on a trustee
basis. The assets concerned comprise mainly holdings in
investment fund assets and a receivable resulting from a
so-called “Capitalisation Transaction” (Kapitalisierungs-
geschäft).
Fund assets are offset against the related
guaranteed obligations. The resulting surplus of assets
over liabilities is reported in the BMW AG balance sheet
on the line “Surplus of pension and similar plan assets
over liabilities”.